Contents

1958 Article

Insurance

Insurance is the practice of distributing the economic risks of an individual or a group among an entire group or at least among a large number of individuals willing to bear their portion of the risk. This method of seeking protection against hazards may cover losses resulting from damage to, or destruction of, life, property, or almost any type of economic wealth. In buying insurance the purchaser gets a contract which sets forth the obligations and benefits falling upon or accruing to the parties involved.

The principle of sharing losses is an old one among Christians. Mennonites from their earliest history have practiced it as an integral part of brotherhood life. Sharing was, however, not thought of in terms of systematic and selective riskbearing modern insurance. The forerunner of presentday insurance was the mutual aid society, which replaced the informal, spontaneous, and unorganized expression of bearing one another's burdens in the primary group relations of the Anabaptist and Mennonite brotherhoods.

As early as 1623 the Mennonites of West Prussia, Germany, organized the Tiegenhofer Privat-Brandordnung for the purpose of rendering systematic aid to members in cases of loss from fire, storm, or other emergencies. It will be noted that this organization did not cover losses due to death but rather losses of property resulting from accidental or natural causes. Such organizations as the above in time became integral parts of Mennonite life and culture when the Prussian Mennonites migrated to Russia and later to the United States and Canada. Toward the latter half of the 19th and early 20th centuries the other Mennonites in America organized a number of similar aid organizations. In 1956 there we approximately 70 mutual aid societies among the Mennonites in the United States and Canada. The majority of these societies protected their members against total losses from fire, storms, hail, and natural disasters. Two societies, however, were simple assessment death benefit societies, and a half dozen were burial aid societies. In the first half of the 20th century, three mutual auto aid societies were formed, also a number of prepayment health and hospital aid societies.

All of the Mennonite aid societies originally accepted only members of Mennonite churches in good standing as participants in their programs, and in 1956 this was still true in about three fourths of the societies. However, a number of the organizations have slowly accepted non-Mennonites. This change in policy was often brought about as a result of intermarriage. Several of the aid societies no longer required Mennonite church membership as a condition of joining, and one of the oldest and largest Mennonite insurance societies dropped the name "Mennonite" and was no longer under Mennonite direction.

The size of the aid societies in 1956 ranged in membership from the smallest with 130 members to the largest society, which took in non-Mennonites, with over 10,000 members. The average for 26 societies in 1955 was 2,500 members. All of the regular mutual aid casualty insurance societies were operated on the simple assessment plan. Although economic reason was not the major one for the existence of the Mennonite societies, the cost of the insurance to the members of the societies was from 25 per cent to 75 per cent lower than in many of the straight commercial insurance companies.

Mennonites were traditionally opposed to commercial insurance companies, and specifically to the principle of life insurance and the companies selling it.

Life Insurance (1958)

Life Insurance (or Assurance), commonly a contract insuring the payment upon the death of a person of certain benefits to a surviving relative or friend. In modern times it has taken on other forms beyond simple death benefit, including endowments and annuities, but in any case the contingencies requiring payment of benefits are always in some way dependent upon human life. Such benefits are in no way related to need, as is the case in other forms of insurance, such as fire, theft, or accident, but only to the amount of money paid in by the policyholder. True life insurance began first in England in 1720, although scientific life insurance did not begin until 1764 with the foundation of the Equitable society in England in that year. On the European continent and in America life insurance developed much later, e.g., the first successful company in France in 1819, in Germany in 1828, and in the United States in 1843 (a few small and short-lived companies had begun earlier, the first in 1812). The Mutual Life Insurance Company of New York was the first permanent large modern company. Life insurance has had its greatest development in the United States and several British dominions, certain of the great companies of the United States in the 1950s constituted the largest aggregates of capital in the world, with tremendous financial power.

At first practically all American Mennonites were radically opposed to life insurance, as were many other Christian denominations. The more conservative Mennonite groups, including the Mennonite Church (MC), forbade their members all forms of life insurance from the beginning, usually making excommunication the penalty. Applicants for membership were required to surrender their insurance policies before being received. At first there was similar opposition to all forms of insurance. By the beginning of the 20th century, however, opposition to fire and auto accident insurance had greatly diminished. The introduction of compulsory workmen's compensation insurance about this time by the several U.S. states created serious problems for conservative Mennonites at first, but ultimately this was generally accepted. Gradually the opposition to life insurance diminished, so that by the middle of the 20th century in the Mennonite Church (MC) the absolute prohibition of holding life insurance was being modified in many areas, although a considerable block of opposition remained where it was still prohibited in the 1950s. In the General Conference Mennonite Church, the Mennonite Brethren Church, and certain related groups, whatever minor opposition there may once have been has completely disappeared, although such opposition apparently never was very strong.

Many weighty arguments have been offered against life insurance, among them the following: it reflects trust in man rather than in God; it means becoming "unequally yoked together with unbelievers"; it is equivalent to merchandising in human life; it is putting a monetary price on human life, which is considered unscriptural since man is the "temple of the Holy Ghost." These objections to insurance were bolstered by a powerful practical argument, namely, that the commercial insurance companies did not really help the needy, but sought only to protect the healthy and rejected as poor risks the weak and the ill who really needed protection. Many Mennonites also objected to taking out life insurance because it was contrary to the spirit of genuine mutual aid and brotherhood. Finally the corrupt practices of many earlier life insurance companies were often cited as objections to all life insurance; and truly the history of life insurance has been marked by many and large scandals, so much so that rigid legislative control was necessary to curb the greed and the fraudulent practices which appeared. The first such law was the Life Assurance Act of 1774 in England, commonly called the Gambling Act since speculation in the lives of other people, particularly public men, had become a public scandal. Numerous American life insurance companies went bankrupt in the 19th century, and frequently policies were so drafted as to trap the unwary and deprive them of their equities. Penalties for nonpayment of premiums were harshly enforced. The evil repute of commercial life insurance among Mennonites was fostered by these indubitable facts, which greatly fortified the theological arguments.

A form of mutual brotherly aid insurance developed among Mennonites in North America in the first half of the 20th century in the form of death and burial benefit associations, which were in effect life insurance arrangements. They differed substantially from commercial life insurance, however, in several respects: (1) the benefit payments were small, intended to cover only the cost of burial, or also medical bills attendant upon the last illness; (2) the system was entirely and truly mutual; (3) salary payments to officials were nonexistent or very low; (4) no agents' premiums were paid; (5) membership was limited to church members.

1989 Update

From the earliest days of the insurance business, insurance has been seen as a way to bear one another's losses. It began as a simple system of cooperation in which "each contributes a small sum to a fund to indemnify in part or in whole against a loss by any other individual of the group similarly situated" (Troyer, p. 16).

The basis for insurance is risk -- the uncertainty of not gaining or losing something of value. Financial loss is the major concern about risk. Insurance transfers, or reduces, risk already in existence. The presence of an existing condition separates insurance from gambling. The risks covered by insurance usually fall into three categories: (1) risks that involve the person (life, health), (2) risks that involve loss of or damage to property (fire, windstorm, loss of income), and (3) risks that involve loss or injury to other persons or to the property of others (liability).

Though the concept of insurance is closely akin to Christian concepts of sharing (mutual aid), attitudes against buying insurance or participating in insurance plans developed among Mennonites in the last century for a number of reasons.

In those days companies were inadequately controlled by government. Consequently, insurance companies maintained insufficient financial reserves, resulting in many company failures. Companies were unscrupulous in sales methods, capitalizing on fear and on the need to provide for survivors. Often policies were written with conditions for the payment of claims so limited that policy holders were unable to collect. In addition, the purchase of insurance, especially life insurance, was seen as a poor investment because a lapse in paying premium resulted in the loss of all money paid. Further, Mennonites for the most part opposed buying on credit (debts). Insurance was seen as encouraging persons to overextend themselves financially and thus to foster greed.

With misgivings like these it was not hard to find Bible texts to support a position against insurance. In the main, insurance (especially life insurance) was seen as out of harmony with God's way to support the needy, since God was able to take care of his people (Acts 6:1-6, John 19:25-27). Insurance also appealed to wrong motives -- fostering selfishness (Luke 6:33, 34) on one hand, and undermining thrift, an essential to the God-honoring life, on the other. To have insurance seemed to many Mennonites to be evidence of unbelief, a lack of faith in God and his promises (Psalms 118:8, 37:25, 1 Peter 5:7, Matthew 6:25, 26). It was also an "unequal yoke" (2 Corinthians 6:14-18) since both believers and unbelievers were policy holders.

Jacob Stauffer (1812-55), a Mennonite minister in Lancaster County, listed 10 articles that could not be tolerated or permitted in the nonresistant church according to God's Word. The fourth article noted ... "it is not permitted to be a member of an insurance company" (Horst, p. 37).

In Bible Doctrine, edited by Daniel Kauffman and published in 1914 under the auspices of the Mennonite Church (MC) General Conference, an entire chapter was devoted to the evils of life insurance from both a religious and a social viewpoint. Life insurance was presented as a poor investment and an encouragement to crime and greed (Kauffman, 1914, pp. 575-587). By 1929 a revision appeared as Doctrines of the Bible. This made a distinction between life insurance and property insurance, giving approval to property insurance. In this view the two had much in common, but on one point they differed widely: it was right to deal in property, it was not right to traffic in human life. Property insurance made merchandise of property; while life insurance made merchandise of human life (Kauffman, 1929, pp. 542, 543).

In the late 19th century many small fire and windstorm insurance companies emerged in Mennonite communities to share the costs of these types of property losses. The 20th century, however, brought the automobile. A Lancaster Conference (MC) teacher-minister, I. B. Good, saw the importance of church members working together to maintain the biblical principle of reimbursing for bodily injury or for damage to property for which Mennonites became liable through operating automobiles. Good encouraged the formation of an automobile insurance company. This was realized in 1926 by establishing the Goodville Mutual Casualty Company, with George C. Souder, president; H. S. Witmer, vice-president; Wayne S. Martin, secretary; and Horace K. Martin, treasurer.

In 1950 leaders of the Virginia Mennonite Conference (MC) invited the Goodville Company to serve beyond the state of Pennsylvania by providing liability coverages in connection with the Virginia Mutual Aid Plan, which wrote property and automobile physical damage insurance.

Seeing what was done in Virginia and Pennsylvania representatives of Mennonite Church (MC) General Conference soon appealed to Goodville Mutual Casualty Company to write liability insurance in other states where Mennonites lived. In response to this, Goodville expanded and became licensed in 17 states. During the 1950s and 1960s (until the reorganization of the Mennonite Church [MC] in 1971), Mennonite Mutual Aid (MMA), which reported to the Mennonite Church General Conference, regularly recommended that Mennonites use the auto physical damage coverage provided through the MMA program and that liability coverage be secured through Goodville Mutual Casualty Company. Neither Goodville Mutual Casualty nor Mennonite Mutual Aid operated in Canada in 1999.

Mennonite Mutual Aid mentioned above was founded in 1945 in the United States to provide help for returning Civilian Public Service men following World War II. It soon put in place insurance programs to cover health needs, and also provided a life insurance program. At the outset, because of opposition to the term "life insurance," "burial aid" was used to label its early life insurance products. In the mid-1950s Mennonite Mutual Aid began Mennonite Automobile Aid to share auto physical damage losses. By that time the climate of opinion had shifted. Mennonite church members were willing to buy not only insurance to cover losses caused to another person (liability coverage); they were also ready to cover their own losses (collision and comprehensive coverage).

With the growth in numbers of insurance companies in the Mennonite context the need for coordination became evident. This led to the founding of the Association of Mennonite Aid Societies, which met in Chicago for the first time, July 14-15, 1955.

In 1987 there are at least 35 insurance companies within the Mennonite constituency (including Brethren in Christ and related groups, i.e., portions of the Church of the Brethren). They provide a wide range of contracts in personal insurance (life, health), liability (personal, auto), and fire and windstorm. In addition many forms of commercial coverages (products, workers' compensation) are available. These insurance companies seriously take into account Christian principles of mutual aid. They practice careful yet considerate underwriting, are prompt and fair in settlement of claims, avoid litigation in favor of arbitration, and many share profits with church causes.

The insurance industry within the Mennonite and Mennonite-related groups is perhaps the least visible and least understood aspect of church life. All of the companies intend to serve the Mennonite constituency. All are zealous to promote mutual aid concepts. Yet at times the concepts of mutual aid tend to get lost among the companies themselves when, for example, one company views another as a competitor rather than a part of the church with which cooperation is necessary, so that all resources may be available to provide the best coverages possible.

Questioning whether Mennonites should purchase insurance has ceased, except in the most conservative groups. The nature of society in the latter part of the 20th century requires people to have insurance coverage on home, car, farm, business, health, and life. The new question is, how can the Mennonite constituency be encouraged to meet insurance needs with coverages purchased from church-related insurance companies rather than from commercial organizations? Too often the purchase of coverages is made solely on the basis of price, without taking into account the provider's commitment to the biblical principles and practice of mutual aid.